Google Apps Future Uncertain with Schmidt Vacating CEO Role
Of the many different ways Google CEO Eric Schmidt's turning over ultimate control to co-founder Larry Page will impact the company I believe Google Apps -- really, the company's entire enterprise business -- will be affected the most. If I'm Google Enterprise President Dave Girouard, I'm cursing the change. With two decades at Sun Microsystems and Novell under his belt, Schmidt is a commander with deep enterprise computing chops. Page will formally take control of Google April 4, but with the announcement Jan. 20, the perceptions of the company have already been altered. As I wrote after a discussion with Gartner analyst Whit Andrews last Friday:
While Andrews believes Google is well-positioned on the consumer-facing Web service and ad front, he's less sure about Google's prospects in the enterprise. As an enterprise-minded CEO, Schmidt is well-groomed for pushing Google Apps.
But Page cut his teeth on the consumer cloth, which raises questions about the future of the company effectively marketing Google Apps for businesses. Google's slip here would make Microsoft, with its enterprise clout, the prohibitive favorite for cloud collaboration software. Google Apps isn't struggling per se, but it's not exactly lighting up the sales charts. Girouard and his team have, quite impressively, tacked on 1 million business customers a year since the product's inception as a business platform in February 2007. I don't care if those are two-person or 10,000-seat shops; they're businesses who have opted to go with a company that had no real enterprise track record. As in, they eschewed the Microsoft and IBM on-premise collaboration software leviathans to take a chance on the cloud. I think Girouard has done a great job, but I'm not sold Page cares terribly how well Google Apps sells for businesses at $50 per user, per year. And I don't think Page is looking back at Microsoft; instead, he is likely to focus on Apple and especially Facebook. I'm not saying Page will blow up Google Apps, but I believe that Google Apps is, more than ever, susceptible to market- and mind-share loss to Microsoft. The software giant's Office 365 cloud collaboration platform is polished and is certainly attractive to businesses and government agencies, as we've seen from the recent shenanigans with the Department of Interior, which seemed to have blatantly ignored Google in favor of Microsoft. Note to Google Apps guys: Win or lose the software discrimination lawsuit, it's never good when you have to sue the government for failing to look in your direction as an agency simply embraces Microsoft's legacy cachet. While the experience must be harrying for Girouard and Schmidt, I'm quite sure Page isn't losing sleep over it. He probably wouldn't think it such a terrible thing if Google Apps were used only in house ad finitum. That's got to be terrifying for a chief information officer, a CIO whose job is to evaluate computing technologies that will support his knowledge workers collaboration needs. Sure, Google Apps is fine now. It's been evolving with several hooks into Microsoft Office to make sure users can seamlessly use their Word documents in Google's cloud and such. But going forward, how the hell is the CIO supposed to trust a company led by a guy who clearly disdains business meetings? I'm not saying existing paid customers are polishing the deck chairs on the Titanic, but if I'm mulling whether to go with Google Apps over Office 365, I'm thinking Office 365 is looking mighty good right now. |
Comments (3)
Apps is an important part of Google's cloud strategy. I don't see them backing away from promoting it to businesses just because Page is becoming CEO. It's a big part of their Chrome ecosystem and will continue to be in the future.
Posted by Daniel Cawrey | January 24, 2011 9:20 AM
This article makes a ton of sense. Google likes to talk like enterprise is important, and I do believe they would like to be successful there, but at the end of the day, it isn't in their DNA. History is replete with examples of companies being unsuccessful trying to do something outside their DNA (ironically, Microsoft itself is an example of lack of consumer success for which they are ridiculed, all the while being an extremely relevant enterprise player).
Posted by RalphF | January 24, 2011 2:37 PM
Office 365 is polished? It's not even available. It's also built on 2010 Server products ... it's 2011. It will be at least 6 more months until Office 365 is released. The client version of Office is required or on-premise SharePoint 2010 is required to run web apps. On premise Lync Server is required. It only includes 4 services vs a dozen or so in Google Apps. Building server products and then rolling out watered down hosted versions 18 to 24 months later isn't going to cut it.
There is a general misunderstanding of Google's current role in the Enterprise. First and foremost, the company already has thousands of Enterprise clients. Including Microsoft and each of the Fortune 10. I don't know what each of these companies spend but Microsoft alone likely spends at least several hundred thousand dollars every month. All of these companies are paying to leverage a SaaS application. Just about every publicly well known Enterprise is already a Google customer. A majority of State Governments are also Google customers. Larry's Enterprise experience is being underestimated.
This is also important to note because Google Apps has much more in common with AdWords and Google.com than it does Office or Exchange Server. Google.com and Adwords run on MapReduce, BigTable, and Google File System - in 2010 Google made massive investments in infrastructure to support these systems. Google.com and Adwords are not the only SaaS applications that run on these systems. Google Apps also runs on MapReduce, BigTable and Google File System. This is the benefit of having an actual cloud computing infrastructure rather than just television commercials.
Google's investments in its core business and systems are also investments in Google Apps. This is how an Enterprise business, while small compared to those with 30 year head starts (duh), can be run profitably. Google Apps profit margins may not rival those of AdWords but they can contribute nicely to the bottom line. Schmidt is not the only Googler with an Enterprise background. You can't help but run into folks formerly of Microsoft, Oracle, IBM, and other "Enterprise-centric" firms. Google Apps already leads the market for hosted messaging at the University level - this is no fluke. (Nor is it because it's free, MSFT's offering is free as well) The next generation of leaders work on the Internet by default, they have no tie to, or thought of, the desktop for broadly adopted applications (i.e. email). Google itself has this culture as do more and more firms everyday. Google Apps and Android go hand in hand - Google Apps is as mobile as Google.com. Google also spent two thirds of a Billion dollars on Postini which has an impressive client list of its own and has been deeply integrated into the Google Apps suite. DocVerse was acquired last year for $25,000,000 and is explicitly designed to integrate Office with Apps. Who was DocVerse? Basically some of the same guys who helped build Windows, Office, SharePoint and SQL Server. Google's first acquisition in 2001 became part of Google Groups - a core component of the Apps suite. Google Apps' Video application is a private YouTube. Apps is not some side project - it is connected to every part of the firm. Another HUGE elephant in the room is consumerization. Everyday another consumer discovers what they can do with Google Apps. They got to pick their phone, what else can they bring to work to make their lives easier? Outlook on the iPad, no dice. Gmail on the iPad, no problem. Excel on that new Mac/iPhone/iPad? Pain in the ass. Google Spreadsheets? Easy as Google.com.
Google Apps makes the world a better place. Google Apps' core is the Web. Google Apps is a global SaaS application. Google's mission is to organize the world's information and make it universally accessible and useful. Google Apps is not out of Google's wheelhouse - it's right down the middle. Mr. Page knows this better than anyone.The founders implicitly stated in their IPO they would often make decisions for the long term and/or that may seem strange risks to investors. To the world that runs on Microsoft, Google Apps may look strange. To the college students using Google Apps, Outlook is something their dad uses. Young business owners of today and tomorrow don't buy Exchange Server (nor did it ever cross their mind) - because that would just be strange. We have the Web now. We have Google Apps. It may take a decade for the change to be fully realized but Google Apps is Google's mission.
Everybody hates business meetings. What does that have to do with anything? Also, you can't pretend to have a RFP and have one solution listed as the option. That's not a RFP. It's our money shouldn't they actually be evaluating their options?
Posted by JoeTierney | January 24, 2011 9:20 PM